SCRA: Settlement With Citibank and Student Loan Corporation

by

Citibank and the Student Loan Corporation have settled a multi million dollar lawsuit related to interest rate violations of the Servicemembers’ Civil Relief Act (SCRA).

Read the good article by Karen Jowers but here’s the gist:

Olson began her active duty in 2005. She later informed Citibank (New York State) of her active-duty status, asking to have her interest rate on her student loan reduced to 6 percent. The Servicemembers’ Civil Relief Act requires lenders to reduce interest rates to 6 percent on loans that were entered into before a service member goes on active duty, as long as the service member provides notification and is materially affected by being called to active duty.

Citibank informed Olson that in order to have her interest rate reduced, her loan had to be placed into forbearance. When lenders put student loans into forbearance, the borrower stops making payments or makes reduced payments for a period of time, but interest continues to accrue. Under the SCRA, additional interest does not accrue. Olson contended that the bank charged her more than 6 percent interest and compounded that extra interest over the remaining terms of the loan.

Service members who qualify to be included in the lawsuit were those who, between July 13, 2004, and Nov. 30, 2011, were in military service and had one or more loans that qualified for the SCRA interest rate reduction and had their student loan placed into forbearance, and had provided written notice to Citibank of their military service.

by
Posted in:
Updated:

Comments are closed.

Contact Information